But with prices dropping dramatically around the world, some entrepreneurs see a new opportunity.

One major challenge is simply convincing people that solar works in Alaska — and that, in fact, Alaska might be ideal solar territory.

The newest solar array in Anchorage sits on top of a two-story office building downtown. Climb up a ladder, through a hatch and onto the roof, and there it is: 86 solar panels sitting in several inches of fresh snow.

Stephen Trimble is the founder of Arctic Solar Ventures, the Anchorage start-up that installed this system at 880 H Street. Surveying the roof in a neon yellow jacket with his business logo stitched into the front, he says over the course of the year, this array will produce almost 15 percent of the building’s total electricity needs — and that’s not bad.

“This is a 20,000-square-foot commercial building,” Trimble said, as Chase Christie, the company’s vice president, adds, “Built in the 1970s. Uses a tremendous amount of electricity.”

At a cost of about $100,000, the system will pay for itself in nine to 12 years, Trimble and Christie said.Over 30 years, they estimate it will save the building owner — who in this case is Anchorage Mayor Ethan Berkowitz — some $300,000.

That’s the math that’s starting to make solar pencil out in Alaska.

The state doesn’t have the generous local incentives that have helped the industry thrive elsewhere. But in the past few years, Trimble said, costs have dropped so quickly that those incentives are no longer necessary.

It was enough to convince him, at least, to take a leap.

“One day I came home and told my wife (now company vice president Jacqueline Savina) … I said, I think I want to start a solar company in Alaska,” Trimble said. “And she was kind of like, what? That’s crazy.”

That reaction is one of the biggest barriers solar companies face in Alaska, Trimble says: education.

That means educating regulators, who often haven’t dealt with solar before; and educating a workforce in a region with very little experience in solar installation. But above all, it means educating consumers: convincing people that solar is an option in Alaska, a state better known for darkness and cold. And harder yet, convincing them that Alaska might even have some advantages.

Take the installation at 880 H Street. In mid-February, there’s snow on the roof, snow on the roads, snow on the park strip. All that snow is actually a plus, said Erin Whitney of the Alaska Center for Energy and Power. She said the spring — especially March and April — can be particularly good months for solar power in Alaska.

“That’s because of the position of the sun as well as the reflection of light from snow surfaces,” Whitney said. “(And) I would actually add to that, cold temperatures, which enhance solar photo-voltaic production.”

Snow and cold: Call them Alaska’s secret solar super powers.

Boosters like to point out the state’s solar potential is comparable to Germany, which is the world leader in solar installations.

Whitney stresses the state isn’t exactly on the edge of a revolution.

“The solar industry is still very nascent in Alaska,” she said.

A recent report from the Solar Foundation ranked Alaska 51st out of 50 states (the list also includes Washington, D.C.) in solar jobs per capita.

The report notes that Alaska solar jobs actually doubled from 2015 to 2016, to a grand total of 64. That’s less than half the number in the next-lowest performer, Wyoming.

And it’s a pretty good shorthand for the solar industry as a whole: it’s growing, but from a very low base.

The two utilities that serve most of Anchorage — Municipal Light & Power and Chugach Electric Association — say solar power represents well under 1 percent of their total generation. But Chugach also said the number of photo-voltaic solar installations in its area more than doubled from 2015 to 2016, for a total of about 70.

For Stephen Trimble and Arctic Solar Ventures, this is a moment of opportunity and risk.

His company hasn’t turned a profit yet — they’re hoping to cross that threshold later this year.

The installation downtown is their biggest system to date.

Trimble and Christie like to keep an eye on it.

“We drive by it a lot, make sure it’s doing good,” Trimble said.

“We hope to see a lot more just like this,” Christie said. “Generating clean energy from your own roof? There’s something very Alaskan about that, I’d say.”

The budgets of oil states are going to be hard hit by the recent slide in oil prices. Measured in dollars, Texas is the clear loser, but in terms of actual on-the-ground impacts, it isn’t quite so simple. In the country’s number two oil-producing state, North Dakota, falling prices have barely caused a ripple, while in Alaska (ranked fourth), lawmakers are calling it a “fiscal apocalypse.” In Wyoming (ranked eighth), reaction has been subdued, but that may not last.

Wyoming Governor Matt Mead set the tone for the conversation in his State of the State address earlier this month.

“I’m pleased to report to all of you, with full confidence: The state of the state is strong, and getting stronger,” he said.

That’s a bold statement given that oil, which accounts for roughly 20 percent of state revenues, has lost more than half its value in recent months. For every $5 drop in the price of a barrel of oil, the state loses $35 million. In the next fiscal year, that’s expected to translate to $220 million dollars less for state coffers.

“We are in a better position now than we have been in the past,” Mead continued. Why? In short: Savings. Wyoming has billions in the bank, including more than $2 billion set aside in a ‘rainy day’ fund. Although no one is talking about spending that money yet, Mead has asked the Legislature for $150 million — from other funds — for things like passing lanes on state highways and a new high altitude sports training center at the university.

“Our forebears did not view the role of government as a bank,” Mead said. “They were not hoarders, but builders.”

Alaska Governor Bill Walker also made plenty of references to forebears in his State of the State address — to their grit and resilience through tough times.

“We are descendants of adventurers, of dreamers, the restless and survivors — those who refuse to accept no for an answer.”

Walker’s message, while arguably optimistic, basically came down to this: DON’T PANIC. That’s because while Wyoming gets 20 percent of its revenues from oil, Alaska gets up to 90 percent, and much of that goes to fund the day-to-day operations of government. Falling oil prices are not denting Alaska’s budget—they’re devastating it. Walker has halted spending on the state’s six major infrastructure projects and says budgets could be cut by up to 25 percent over the next four years.

“Today we are faced with a $3.5 billion deficit and as I said, using $10 million every day from our savings,” he continued. “Some might call this a crisis. I call this a challenge and an opportunity.”

Whatever you call it, it’s a far cry from the situation in North Dakota, which produces almost twice as much oil as Alaska. There, it’s basically business-as-usual.

“Oil is a non-renewable resource, it’s a one-time funding source and it goes, mostly, into long-term trust funds,” said Ryan Rauschenberger, North Dakota’s tax commissioner.

In that state, less than five percent of oil revenue actually goes to the general fund. Which is probably why Rauschenberger, and most other state officials, sound decidedly un-panicked.

“Keep in mind, we had originally forecasted $8.3 billion in total oil and gas taxes, but by law, only $300 million goes into the general fund, and that’s one of the first things that gets deposited, so that again is relatively secure when it comes to ongoing revenues for the state.”

Of course, no one knows when the oil price slide will end, or reverse, and even in states where calm has prevailed, it may not last. After a presentation about future state revenues, Wyoming Representative Tim Stubson urged caution.

“Everybody says we’re better prepared, but in the early ’90s, before they hit 10 years of flat budget, they may have thought they were well-prepared too,” he said.

In light of that, Stubson is less eager than the Governor to spend money right now.

“If we fall to temptation of spending every dime when we have it, then we’re going to be in real trouble,” he said. “But if we recognize this volatility and we plan for it, then I think we can build stability into the system.”

Stubson is likely to find some push-back on the idea that government spending should conform to the worst-case scenario, especially in light of the state’s massive savings accounts. It’s clear, though, that regardless of who wins that argument — the hoarders or the spenders — the conversation will dominate oil state capitols for months to come.

]]>http://insideenergy.org/2015/01/26/from-fiscal-apocalypse-to-meh-oil-states-respond-to-price-slide/feed/0Alaska’s Energy Labshttp://insideenergy.org/2014/12/10/alaskas-energy-labs/
http://insideenergy.org/2014/12/10/alaskas-energy-labs/#respondWed, 10 Dec 2014 22:54:56 +0000http://www.insideenergy.org/?p=1312 High Country News | Alaska models renewable-diesel hybrid microgrids that could be used for communities too remote to be hooked up to the grid. ]]>December 8, 2014 | High Country News | Sarah Tory

Microgrids are popping up in the most interesting places! A fascinating story in the latest issue of High Country News points to Alaska as a laboratory for hybrid renewable energy systems to power remote communities not hooked up to the grid. Its ironic that this is happening in Alaska, of course, as the state is dominated by the oil and gas industry.

At the center of the story is a tiny Alaska hamlet called Kwigillingok that has its own electricity grid powered by two diesel generators. 200 other Alaskan towns are in the same boat: too far away to be connected to the central grid, and dependent on diesel, which is expensive and dirty.

But in the last 10 years, Kwigillongok has put up a total of 15 wind turbines which they now use to displace 30 percent of the diesel-fueled energy. There are estimates that half of Alaska’s most remote villages could be fueled by a renewable-diesel hybrid. The experiment has been so successful that Alaska Senators Lisa Murkowski (incoming chair for the Senate Committee on Energy and Natural Resources) and Mark Begich have begun talking about the prospect of Alaska creating a model energy system that could be exported to other countries where remote villages are energy “islands”.

Stephanie Joyce: Here in the lower 48, all we hear about is the boom. Booming oil, booming gas. How are things different in Alaska?

Alexandra Gutierrez: In Alaska, we hear that it’s booming everywhere but here. We still have the largest [North American] oil fields in production, but they’ve been in decline since 1988, and we haven’t had the same shale boom as everyone else.

Joyce: Why does it matter if it’s booming or not in Alaska?

Gutierrez: Ninety percent of our state’s revenue comes from oil. If we don’t have oil, we can’t tax the oil. So, we start looking at less money for our schools, less money for Medicaid, less money for road and infrastructure projects. Basically the way our state government is funded is being upended. We don’t have a large population base, just a large landmass. So even if the state imposed an income tax or sales tax, it couldn’t keep up the level of spending that it’s established. Beyond government [services], there are also a lot of jobs up here that are dependent on the industry. Without them, you’re potentially looking at people leaving the state.

Joyce: Alaska has always known this is coming, that oil is a finite resource and that at some point the state was going to run out. How has Alaska positioned itself for declining oil?

Gutierrez: Well, there’s that bumper sticker saying about the state, “Lord, please give us another boom. We promise we won’t squander it like the last one.” The state is not in the absolute worst position to face the oil decline. We have $50 billion in our Permanent Fund. And we still have more than $10 billion in the bank in our budget reserves. The problem is, is it enough? There have been studies that [show] that at the current rate of [oil] decline, if state spending were capped at $5 billion or so, the state could basically live off of the investment. We could adopt a Norway model. The problem is, our state spending isn’t at $5 billion. It’s at more than that, and it doesn’t look like there are easy ways to rein it in, unless we cut some major projects that we’ve already started and keep our operating budget flat. Which isn’t an easy thing to do.

Joyce: Is there a way to bring back oil production in Alaska?

Gutierrez: We’re hearing a lot from oil companies that they’re currently reinvesting in Alaska because of a new tax structure that was passed last year that caps the tax rate on oil production. Previously, we’d had a system where the tax rate on oil went up as the profits on oil went up. So, if you were looking at high oil prices, the oil companies could be paying as much as 75 percent production tax on oil coming from the North Slope. The [new] system caps the tax rate at 35 percent, with further deductions down from that. So obviously, that could be a boon to the oil companies. It’s said the tax break is worth billions of dollars.

Joyce: So are the Alaska oil fields just tapped out? Is there any chance of them booming again?

Gutierrez: No one is expecting us to find another Prudhoe Bay. We do still have billions of barrels of proven reserves left, and that’s obviously worth something, but the next goal in energy production is actually developing our natural gas. We have incredible, unfathomably huge gas reserves that have long been uneconomic to produce. Soon after oil was discovered and an oil pipeline was built, there was talk of a natural gas pipeline being built. This is not a new idea — it’s from the 1970s. But every effort to build a natural gas pipeline has been stymied, because it’s just not as profitable as oil.

Up until now, the farthest it’s gotten recently was Sarah Palin’s Gasline Inducement Act. You might remember that when she was introduced at the Republican convention in 2008 as the vice presidential nominee, she talked about ‘we’re building a pipeline! we’re building a pipeline!’ What she was talking about was a proposed gas line that would take Alaska natural gas, through Canada, down to the Lower 48 to sell. You might have picked up on the fact that that’s right around the time things started booming in the Lower 48. It obviously never came to fruition.

Now, Alaska is considering one of two options for a natural gas pipeline. The preferred option would cost at least $45 billion and it would take North Slope natural gas down to tidewater, so 800 miles, down through Alaska. Then, the liquified natural gas would be taken to Asia. Without getting into hard figures about the revenues that would bring in, it would be helpful, but it wouldn’t in any way fill the gap that oil would leave behind.

Joyce: So what does Alaska’s future hold in terms of energy production and revenues from energy production?

Gutierrez: Well, there are two schools of thought when it comes to the future of energy production in Alaska. There’s one that says we can’t reverse the [oil] decline, that looking at [Alaska’s] oil fields and how other massive fields like it have produced, that we’re in our twilight. But then there’s another school of thought that’s ‘no, we can explore more, we have the pipeline infrastructure, we just need to encourage the oil companies to spend their money here.’

It’s hard to say, but let me put it this way: a few years [ago], the big promise was, “we can turn around decline.” Now all we’re hearing is, “we can stop the decline.” There’s a big difference between those two statements.

Alexandra Gutierrez is Alaska Public Radio’s statehouse reporter. She missed her turn while driving through Anchorage during this interview because “I was trying to be smart on oil.”

We nerded out a little bit here at Inside Energy when we saw this new graph by the Energy Information Administration. After all, we love to think we are impressing our friends with energy-related bar trivia like this.

Alaska’s economy is the second most dependent on mining, after Wyoming. But mining’s share of the economy is dropping there along with oil production from the North Slope.

The percentage of North Dakota’s economy that’s related to mining (which includes oil and gas) is growing faster than in any other state. In 2003, mining made up 2 percent of the economy. In 2013, it was 14 percent.

When it comes to overall size of the mining sector, Texas is still king.

It’s also worth pointing out that energy states have some of the fastest growing economies and lowest unemployment rates in the country. According to the EIA, “of the six states where mining comprised more than 10% of the state’s economy in 2013, mining growth resulted in five of those states having higher economic growth than the national average.”

Now that’s a good piece of trivia for roughnecks in the dive bars of rural Wyoming (or energy nerds in radio studios in Denver) to keep in their back pockets.